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Mushroom farm businesses specialize in growing mushrooms. These mushrooms are used by customers for either medicinal or culinary purposes, depending on the type of mushroom grown. Additionally, they may be sold wholesale to clients or at retail prices.
Who is this business right for?
Anyone who enjoys working with their hands and interacting with people may be well-suited for running a mushroom farm business. Growing mushrooms is a hands-on task, and having an ability to connect with people can help business owners share their product with potential customers.
A mushroom farm can be started as a part-time business while working another job. Mushrooms require a little attention each day, but they aren’t too demanding, and they can be tended to at any time of the day or night. It’s easy to fit growing mushrooms around other obligations.
What happens during a typical day at a mushroom farm?
The process of actually growing mushrooms involves three steps:
- preparing growing medium, which takes a few hours and should be done once per week
- misting growing mushrooms, which takes a few minutes and must be done daily
- harvesting mature mushrooms, which takes a few minutes and should be done every day or two
In addition to these tasks, mushroom farm business owners also must find customers, package harvested mushrooms, and deliver mushrooms.
What is the target market?
A mushroom farm business’ ideal customer is a restaurant that focuses on using locally sourced ingredients. A restaurant will have regular orders that provide stable income. A restaurant that focuses on serving locally sourced foods will be less likely to purchase their mushrooms from a large supplier that’s in another state.
How does a mushroom farm make money?
A mushroom farm makes money by selling harvested mushrooms. Mushrooms might be sold by the pint, quart, or pound.
What is the growth potential for a mushroom farm?
A mushroom farm business may be a small, one-person operation, or it might grow into a large company that has multiple locations. Detroit Mushroom Factory, which is run by just two people, is an example of a small mushroom farm. Ostrom’s is a much larger company that has customers located throughout the Northwest United States.
What are some skills and experiences that will help you build a successful mushroom farm?
In order to run a mushroom farm, business owners must know how to grow mushrooms. Many companies offer courses and seminars on growing these fungi. For instance, Fungi for the People offers a week-long course every few months, and Radical Mycology has courses in many different states. Additionally, both Mushroom Mountain and The Mushroom Growers’ Newsletter maintain lists of upcoming conferences and educational events.
Finally, many books about growing mushrooms and starting a mushroom business are available. A few titles include Organic Mushroom Farming and Mycoremediation, Growing Mushrooms for Profit and Starting a Mushroom Growing Business on a Shoestring. Some of these books provide valuable insights into growing mushrooms commercially, while others are helpful resources that can be consulted after a class is over.
What are the costs involved in opening a mushroom farm?
The startup expenses for a mushroom farm are minimal.
Business owners need a space for growing mushrooms. This doesn’t need to be a large space -- 500 square feet is big enough to grow 12,000 pounds of mushrooms a year, according to Profitable Plants. Business owners should be able to control the temperature, humidity, and light in the space, though.
Many business owners already have a space in their home that meets these requirements. Those that don’t might only have to purchase a space heater, humidifier, or dehumidifier.
The other main upfront costs are buying growing medium and spores, but these are both inexpensive. Straw, cardboard used coffee grounds and many other cheap materials can serve as growing mediums. Mushroom spores can be purchased for just a few dollars. Spore Trading Post sells 100 plugs of spores for $18.95.
What are the steps to start a mushroom farm?
Once you're ready to start your mushroom farm, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your mushroom farm is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your mushroom farm keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a mushroom farm?
While mushrooms are generally easy to grow, some types are easier to grow than others. Heather of Mommypotamus recommends starting with oyster mushrooms, which are the easiest to grow, and then progressing to shiitake mushrooms, which are the next-easiest. From this point, business owners can slowly progress into more challenging kinds.
How to promote & market a mushroom farm
One of the most effective ways to promote a mushroom farm business is through in-person interactions. Talking to potential customers, whether they’re consumers, grocery store owners, or chefs, is the best way for business owners to educate customers and share their passion for mushrooms. Business owners can create opportunities to connect with potential customers by selling mushrooms at farmers’ markets and making sales calls to businesses.
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How to keep customers coming back
Mushroom farm businesses can keep customers coming back for more mushrooms by helping them discover more ways to use mushrooms. This may include sharing recipes or introducing mushrooms as a healthy snack. The more customers use mushrooms, the more frequently they’ll need to purchase the fungi.
How and when to build a team
Many mushroom farm businesses are run by just one or two people. Mushroom farms that hire employees usually don’t do so until their revenue supports an employee’s salary.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a mushroom farm. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
In business where services are provided on an extended basis, a services contract is often put in place outlining terms and conditions of service.
Mushroom farming businesses should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, and service level expectations. An example of a service contract can be found here.
Labor safety requirements
It is important to comply with all Occupational Safety and Health Administration requirements.
Relevant requirements include:
- Employee injury report
- Safety signage
How much can you charge customers?
Specialty mushrooms typically retail for $16 per pound. Oyster mushrooms wholesale for between $6 and $8 per pound, and other types of specialty mushrooms have similar wholesale prices.
Because most people don’t want to spend $16 on mushrooms, retail sales are usually done by the pint or quarter-pound. Wholesale transactions normally are by the pound.
What are the ongoing expenses for a mushroom farm?
The ongoing expenses for a mushroom farm business are minimal. They include new growing material, additional spores, and utility costs.
How much profit can a mushroom farm make?
A mushroom farm business that grows 12,000 pounds of mushrooms and only sells to wholesale clients could make between $72,000 and $96,000 annually. Selling retail in addition to wholesale would significantly increase the business’ revenue. Since the ongoing expenses are minimal, most of this revenue would be profit.
How can you make your business more profitable?
Many mushroom farm businesses add a revenue stream by assembling grow-your-own mushroom kits. These may be in cardboard boxes, logs or some other medium. Offering classes on growing or using mushrooms is another way to increase revenue and profits.